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Judicial Watch • CHEATHAM V. DICICCIO, ET AL. Phoenix PLEA 0287



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Plain tiffs/Appellees,
Plain tiffs/Appellees,
No. CV-15-0287-PR
Filed September 13, 2016
Appeal from the Superior Court Maricopa County
The Honorable Katherine Cooper, Judge
No. CV2011-021634
Opinion the Court Appeals, Division One
238 Ariz. 69,356 P.3d 814 (App. 2015)
Jonathan Riches (argued), Scharf-Norton Center for Constitutional
Opinion the Court
Litigation the Goldwater Institute, Phoenix, Attorneys for William
Cheatham and Marcus Huey
Brad Holm, Phoenix City Attorney, Phoenix; and John Alan Doran, Lori
Wright Keffer, Matthew Hesketh, Sherman Howard L.L.C, Phoenix,
Attorneys for Sal DiCiccio and City Phoenix
Michael Napier (argued), Cassidy Bacon, Napier, Coury Baillie, P.C,
Phoenix, Attorneys for Phoenix Law Enforcement Association
Barbara LaWall, Pima County Attorney, Regina Nassen, Deputy
County Attorney, Tucson, Attorneys for Amicus Curiae Pima County
David Abney, Knapp Roberts, P.C, Scottsdale, Attorneys for Amicus
Curiae PORAC Legal Defense Fund
Larry James, Crabbe, Brown James, LLP, Columbus, OH; and Robert Yen, Yen Pilch Landeen, P.C, Phoenix, Attorneys for Amicus Curiae
National Fraternal Order Police
James Burling, Pacific Legal Foundation, Sacramento, CA, Attorneys for
Amicus Curiae Pacific Legal Foundation
Roopali Desai, Shelley Tolman, Coppersmith Brockelman PLC,
Phoenix, Attorneys for Amici Curiae United Phoenix Firefighters
Association, Local 493, Professional Fire Fighters Arizona, and
International Association Fire Fighters
Gerald Barrett, Ward, Keenan Barrett, P.C, Phoenix, Attorneys for
Amicus Curiae National Association Police Organizations
Susan Martin, Jennifer Kroll, Martin Bonnett, PLLC, Phoenix; Nicholas Enoch, Lubin Enoch, P.C, Phoenix, Attorneys for Amici Curiae
American Federation State, County and Municipal Employees, Locals
2384 and 2960
Opinion the Court
CHIEF JUSTICE BALES authored the opinion the Court, which VICE
CHIEF JUSTICE BALES, opinion the Court:
The Gift Clause Arizonas Constitution bars cities and other
public entities from mak[ing] any donation grant, subsidy
otherwise, any individual, association, corporation. Ariz. Const. art. For decades, the City Phoenix has contracted collective
bargaining agreements with police officers allow release time, that is, pay officers for certain time spent behalf their authorized
representative police union) rather than regular police duties. hold
that the release time provisions issue here not violate the Gift Clause.
Police officers employed the City Phoenix (the City)
are divided into units. Relevant here Unit which comprises
approximately 2,500 officers, whom nearly ninety percent are members the Phoenix Law Enforcement Association (PLEA). PLEA
employee organization or, more colloquially, police union. Pursuant
the Phoenix City Code, PLEA the recognized representative for the Unit officers and, every other year, negotiates with the City the terms
employment for those officers, whether PLEA members not. See Phx.
City Code Art. XVII 2-209. The agreed upon terms are embodied
collective bargaining agreement called Memorandum Understanding
(MOU), which governs the officers wages, hours, and general
employment conditions. Since 1977, every MOU has included provisions
for release time, that is, times when officers will excused from usual
police duties, but are still paid the City, while they perform PLEA
activities and conduct PLEA business.
This litigation began 2011, when William Cheatham and
Marcus Huey (collectively Taxpayers) sued the City, alleging that four
Justice Clint Bolick has recused himself from this case. Pursuant article section the Arizona Constitution, the Honorable Joseph Howard,
Judge the Arizona Court Appeals, Division Two, was designated sit this matter.
Opinion the Court
release time provisions the 2010-2012 MOU violated the Gift Clause.
Taxpayers challenged three provisions that authorized six full-time officers each receive full pay, benefits, and 160 hours overtime per year and
allocated other officers bank 1,583 release time hours per year for
legitimate [a]ssociation business, including preparing for negotiations
with the City. 2010-2012 MOU 1-3(G), (I), (Q). The fourth challenged
category allotted total fifteen days paid leave per year for officers
attend PLEA seminars, lectures, and conventions. Id. 1-3(K). June 2012,
the trial court granted preliminary injunction after concluding that least
some the challenged provisions violated the Gift Clause.
Shortly thereafter, the 2010-2012 MOU was superseded
the 2012-2014 MOU, which contained similar release time provisions.
Under the new MOU, the six full-time officers, instead each receiving 160
hours overtime, could draw bank 960 hours overtime for time
spent serving city committees task forces and the general bank
release time was increased 1,859 hours. 2012-2014 MOU 1-3(B)(3), (Q).
The 2012-2014 MOU also allowed PLEA designate forty-two
representatives who, without losing payor benefits, and subject normal
departmental scheduling and assignment, could attend grievance meetings
and other specified meetings and hearings, when the Unit officer involved the proceeding designates PLEA his her representative. Id. 13(B)(2)(a). Time spent these representatives for purposes other than
attending the identified hearings meetings, such gathering
information otherwise preparing, would charged against the bank
release time. Id. 1-3(B). Finally, PLEA was allowed appoint legislative
representative who would receive 500 hours release time, provided the
officer has agreed work with and assist the [C]itys legislative lobbyist.
Id. 1-3(C).
Taxpayers amended their complaint challenge the 20122014 provisions. The trial court preliminarily enjoined the provisions and,
after bench trial, later issued permanent injunction, ruling that the
provisions violate the Gift Clause because they lack public purpose and
are not supported adequate consideration. Additionally, the trial court
permanently enjoined the City and PLEA from entering into future MOUs
with release time provisions absent certain conditions.
The City and PLEA appealed. Without deciding whether the
release time provisions serve public purpose, the court appeals held
Opinion the Court
that they are not supported adequate consideration, inasmuch the
MOU does not obligate PLEA perform any specific duty give
anything return for the release time. Cheatham Diccicio, 238 Ariz. 69,
74-75 16, 20, 356 P.3d 814, 819-20 (App. 2015). The court appeals
affirmed the trial courts order the extent that enjoins the 2012-2014
MOU release time provisions and that enjoins the City and PLEA from
entering into future MOUs agreements with release time, unless they
imposed upon PLEA binding obligations. Id. 27,356 P.3d 821. granted review because whether the Gift Clause bars
release time provisions collective bargaining agreements for public
employees legal issue statewide importance. have jurisdiction
pursuant article section 5(3), the Arizona Constitution and
A.R.S. 12-120.24.
II. review trial courts grant injunction for abuse discretion, Valley Med. Specialists Farber, 194 Ariz. 363, 366 9,982 P.2d
1277, 1280 (1999), and the interpretation and application constitutional
provisions novo. Ross Bennett, 228 Ariz. 174, 176 6,265 P.3d 356, 358
The Gift Clause provides: Neither the state, nor any county,
city, town, municipality, other subdivision the state shall ever give
loan its credit the aid of, make any donation grant, subsidy
otherwise, any individual, association, corporation. Ariz. Const. art. The clause has two primary purposes preventing the depletion
the public treasury inflation public debt engagement non-public
enterprise and protecting public funds against use for the purely private personal interest any individual. Kromko Ariz. Bd. Regents, 149
Ariz. 319, 320-21, 718 P.2d 478, 479-80 (1986) (internal quotations,
emphasis, and citations omitted); Wistuber Paradise Valley Unified Sch.
Dist., 141 Ariz. 346, 349, 687 P.2d 354, 357 (1984) (The constitutional
prohibition was intended prevent governmental bodies from depleting
the public treasury giving advantages special interests[.],,).
~10 two-prong test determines whether challenged
government expenditure violates the Gift Clause. See Turken Gordon, 223
Opinion the Court
Ariz. 342, 348 22, 224 P.3d 158, 164 (2010); Wistuber, 141 Ariz. 349, 687
P.2d 357. The expenditure will upheld (1) has public purpose,
and (2) the consideration received the government not grossly
disproportionate the amounts paid the private entity. Turken, 223
Ariz. 345, 348 22, 224 P.3d 161, 164. evaluating Gift Clause
challenges, [a] panoptic view the facts each transaction required,
and courts must not overly technical and must give appropriate
deference the findings the governmental body. Wistuber, 141 Ariz.
349, 687 P.2d 357.
Our analysis begins recogruzmg that the challenged
release time provisions are part the MOU, collective bargaining
agreement between the City, PLEA the authorized representative the
Unit officers, and the officers who are subject the MOU. The MOU
tum must understood light the governing provisions the Phoenix
City Code.
The City Codes Meet and Confer Ordinance recognizes the
right public employees representation employee organization
their choosing and meet and confer through authorized employee
organization with their public employer when negotiating employment
terms such wages hours. Phx. City Code Art. XVII 2-214(B), 2210(11). The authorized representative here, PLEA formally
recognized the City representing majority the employees the
appropriate unit here, Unit and authorized participate the
meet and confer process behalf the appropriate unit for the purpose meeting and conferring wages, hours, and working conditions. Id.
2-210(2). The Code also requires PLEA, the employees representative, engage discussions with the City resolve grievances and disputes
relating wages, hours, and working conditions. Id. 2-209.
All agreements arrived the City and the employees
authorized representative are recorded MOU and presented the
City Council and the employee members the authorized organization for
approval. Id. 2-210(12). Thus, finalized MOU agreement that binds
the City the employer, the authorized representative for the employees,
and the employees themselves.
Opinion the Court
Under the MOU for Unit release time component the
overall compensation package negotiated between the City and PLEA
behalf the police officers. Before negotiating the specific terms the
2012-2014 package, the City allocated $660 million for the total
compensation Unit officers. The parties then negotiated the allocation that amount for various purposes (e.g., hourly compensation, overtime,
and paid leave time). lieu increased hourly compensation other
benefits, PLEA negotiated for release time provisions worth about $1.7
million over two-year period, $322 annually per unit member. One
the Citys negotiators testified, without contradiction, that the City had
not agreed pay for release time, the corresponding amounts would have
otherwise been part the total compensation available. The MOU itself
acknowledges that [t]he cost the City for these release positions,
including all benefits, has been charged part the total compensation
contained this agreement lieu wages and benefits. 2012-2014 MOU
1-3(B). Interpreting the MOU legal question, and our conclusion that
release time part the negotiated total compensation package not
affected the trial courts observing that officers could not simply divide
total compensation however they wished that the MOU does not discuss
release time under Compensation/Wages. Similarly, not think
that the MOUs characterization release time part total
compensation undermined one Councilmans statements (made long
after the Council had approved the MOU) that different components
compensation are negotiated separately and the agreement does not
identify the cost total compensation. Taylor State Farm Mut. Auto.
Ins. Co., 175 Ariz. 148, 153, 854 P.2d 1134, 1139 (1993) (noting that courts
seek interpret contracts give effect parties expressed intent).
The MOU describes the general purposes release time.
Noting the benefits harmonious and cooperative relationships between
the City and its employees, the MOU states that the full-time release
positions, and release hours, afford efficient and readily available point contact for addressing labor-management concerns. 2012-2014 MOU
1-3(B). Examples how officers spend release time include representing
Unit officers administrative investigations and grievance/ disciplinary
appeal meetings with management; participating collaborative labormanagement initiatives ... serving Police Department task forces and
committees; facilitating effective communication between City and
Department management and unit employees; assisting unit members
Opinion the Court
understanding and following work rules; and administering the provisions the [MOU]. Id.
The MOU also identifies various rights and obligations with
respect release time. For example, the use paid release hours subject Departmental operational and scheduling factors, and requires least
twenty-four hours written advance notice. Id. 1-3(B)(3)(c). Release hours
must used for legitimate [PLEA] business. Id. 1-3(B)(3). The fulltime release positions must filled full-time, sworn officers who will all times remain qualified perform normal police duties and who
remain bound the Citys and the Police Departments rules, regulations,
and operations orders[.] Id. 1-3(B)(1). All Unit officers are entitled
have PLEA serve their meet and confer representative under the City
Code and represented PLEA concerning grievances and other
matters relating employment rights and obligations. Id. 1-4(A), (B).
~17 not unusual for collective bargaining agreements
include provisions requiring employers pay certain employees for time
spent union activities. noted earlier, Phoenix has included provisions
for release time its MOU for Unit for decades. The Citys Meet and
Confer Ordinance has provisions similar those the federal National
Labor Relations Act with regard the right employees bargain
collectively with respect wages, hours, and working conditions.
Compare Phx. City Code Art. XVII 2-214(B) with U.S.c. 158(d). Federal
courts have recognized that employer payments for time spent
employees during working hours certain union activities, such
handling grievances negotiating with the employer, are mandatory
subject collective bargaining because such payments relate the
employees wages, hours, and other terms and conditions
employment. See NLRB BASF Wyandotte Corp., 798 F.2d 849, 852-53 (5th
Cir. 1986); Axelson, Inc. NLRB, 599 F.2d 91, (5th Cir. 1979); IntZ Assn Machinists Aerospace Workers Goodrich Aerospace Aerostructures
Grp., 387 F.3d 1046, 1055-56 (9th Cir. 2004) (noting disagreement
among federal courts whether Labor Management Relations Act allows
full-time release payments distinct from paid time off for union duties).
That the release time provisions issue here are part the
negotiated compensation package between the City, PLEA, and the Unit
officers the beginning but not the end our analysis. The lower courts,
and Taxpayers, erroneously characterized the $1.7 million value the
Opinion the Court
release time merely payment PLEA which must assessed
relative what the MOU obligated PLEA provide the City return.
Cheatham, 238 20,356 P.3d 820. sure, PLEA benefits from
the Citys agreement pay officers for time (some full-time) spent
behalf PLEA. But the release time provisions must assessed light the entire MOU, including the obligations imposed not only PLEA but
also the employees for whom the authorized representative. Doing
otherwise would conflict with the requirement that courts adopt
panoptic view the transaction assessing Gift Clause challenges.
~19 also reject PLEAs argument that the release time
provisions are not subject Gift Clause scrutiny because they are part
the compensation package negotiated behalf the Unit officers. That public entity making payments employees (here, payments for time
spent union-related activities) pursuant collective bargaining
agreement does not necessarily obviate the concerns underlying the Gift
Clause. Public funds conceivably could expended for private purposes amounts grossly disproportionate the benefits received even under collective bargaining agreement. Accordingly, turn our usual Gift
Clause analysis evaluating Taxpayers challenge the release time
provisions. Turken, 223 Ariz. 346 10,224 P.3d 162 (noting that Gift
Clause seeks prevent subsidies private interests putatively serving
quaSi-public purposes).
Taxpayers argue that the release time provisions not serve public purpose because they foster promote the purely private
personal interests PLEA. Kromko, 149 Ariz. 321, 718 P.2d 480
(analyzing public purpose before assessing adequacy consideration)
(emphasis omitted).
~21 determining whether transaction serves public purpose,
courts consider the reality the transaction and not merely surface
indicia public purpose. Wistuber, 141 Ariz. 349,687 P.2d 357. This
inquiry, however, must reflect appropriate deference the governmental
entity that has considered and approved the transaction. [W]e have
repeatedly emphasized that the primary determination whether
specific purpose constitutes public purpose assigned the political
branches government, which are directly accountable the public.
Turken, 223 Ariz. 165 28, 224 P.3d 349. For Gift Clause purposes,
Opinion the Court
public purpose lacking only those rare cases which the
governmental bodys discretion has been unquestionably abused. Id.
(internal quotation marks and citations omitted).
Consistent with these principles, have found the existence public purpose various situations. See id. 348 23, 224 P.3d 164
(finding that the purchase parking spaces constituted public purpose);
City Glendale White, Ariz. 231, 240, 194 P.2d 435, 441 (1948) (finding
that city acted with public purpose when joined the Arizona Municipal
League); Humphrey City Phoenix, Ariz. 374, 387, 102 P.2d 82, (1940)
(finding that slum clearance program served public purpose).
The MOU, including its release time provisions, serves
public purpose. procures police services for the City. Furthermore, the
City Council recognized that the MOU identifies PLEA the authorized
representative Unit officers with whom the City can deal all laborrelated matters; under the MOU and the Citys ordinance, PLEA obliged represent and serve all Unit officers, whether not they are PLEA
members. Moreover, the City benefits from more efficient negotiations
because collectively negotiates with PLEA, rather than with individual
Such proVISIOns obviously may benefit the officers who,
collectively, have chosen PLEA their representative dealings with their
employer (one officer testified that views the release time provisions
analogous insurance benefits). The provisions, even considered
isolation, also benefit the City insofar they are benefit offered current prospective employees and they can facilitate the resolution
grievances and other employee-employer issues under the Citys Meet and
Confer Ordinance. Intl Assn Machinists Aerospace Workers, 387 F.3d 1057-58 (recognizing, for purposes federal labor laws, that employerpaid union shop steward provides services that benefit union and
corporation alike).
The dissent, like the trial court, concludes that release time
does not serve public purpose but instead benefits PLEA private
entity. Infra 46, 51. But this position views the release time benefits
isolation rather than part the MOU whole, which provides police
services the public. Wistuber, 141 Ariz. 349,687 P.2d 357 (panoptic
view required). This also views too narrowly both the role public
Opinion the Court
employee unions and the publics interest. PLEA, the authorized
representative chosen majority Unit officers, serves not only its
own interests, but also those its members. While the City may sometimes adversarial role relative the union (sitting across the table,
speak, labor negotiations employment-related disputes), the City
its own ordinance recognizes may also benefit employer having identified representative the Unit officers for employment-related
issues. See Phx. City Code Art. XVII 2-209 (It also the purpose this
ordinance promote the improvement employer-employee relations recognizing public employees right represented
organization their choosing their employer-employee dealings with
the City). Further, governmental entity, the City has interests broader
than private employer based the unique fact that the public employer
was established and operated for the benefit all the people ....
Phx. City Code Art. XVII 2-209(4).
Moreover, well established that labor unions, which have
existed the United States for over two hundred years, generally work
advance the employment interests represented employees. See, e.g.,
Charles Carver, The Impact Labor Unions Worker Rights and Other
Social Movements, ABA Lab. Emp. 267, 269-70 (2011). Contrary
the dissents contention, public purpose may served PLEAs
representational activities the extent they promote improved labor
relations and employment conditions for public safety officers. Phx. City
Code Art. XVII 2-209(1) (The people Phoenix have fundamental
interest the development harmonious and cooperative relationships
between the City government and its employees.).
The City Council did not abuse its discretion concluding
that the MOU, including the release time provisions, serves public
purpose specifying the wages, hours, and working conditions for Unit officers, recognizing the role PLEA the officers authorized
representative, and providing, part the aggregate compensation,
that certain officers will paid for release time spent behalf PLEA.
Because hold that the MOU serves public purpose,
next examine whether the consideration paid the City under that
agreement grossly disproportionate the benefits the City receives.
Opinion the Court
Consideration performance return promise that
bargained for exchange for the other partys promise. Schade Diethrich,
158 Ariz. 760 P.2d 1050, 1057 (1988) (citing Restatement (Second)
Contracts (Amer. Law Inst. 1981)). Although courts not normally
scrutinize the adequacy consideration between parties contracting
arms length, appropriately examine consideration when analyzing
contract under the Gift Clause because paying far too much for something
effectively creates subsidy from the public the seller. Turken, 223 Ariz. 350 32, 224 P.3d 166.
~30 analyzing the adequacy consideration, courts also adopt panoptic view the transaction. See id. 352 47, 224 P.3d 168
(noting that Wistubers language was thus meant reject overly
technical view the transaction); State Nw. Mut. Ins. Co., Ariz. 50,54,
340 P.2d 200, 202 (1959) (using term panoptic rejecting contention that mutual insurance companys return excess premiums its members,
including school district, established that the initial premium payments
violated the Gift Clause). Such approach particularly appropriate with
respect collective bargaining agreement, which not merely
exchange discrete promises, but instead long-term relational
contract governing the whole employment relationship. Intl Union
Operating Engrs, Local 139, ALF-CIO J.H. Findorff Son, Inc., 393 F.3d 742,
746 (7th Cir. 2004); see Consolo Rail Corp. Ry. Labor Execs. Assn, 491 U.S.
299,312 (1989).
Thus, when considering Gift Clause challenge provisions collective bargaining agreement, cannot consider particular
provisions isolation. For example, such agreement provided for
paid vacation personal leave time for public employees, the adequacy
the consideration received the employer would not evaluated
asking the employees must use their time way that benefits the
employer. that situation, the consideration received the employer
the work the employees generally agree provide under the agreement,
not only during their paid leave vacation times.
Our analysis therefore recognizes that the MOU
agreement between not only the City and PLEA but also the Unit officers,
who approved and are bound its terms. Even PLEA viewed the
primary beneficiary the release time provisions, gauging whether the
City has received consideration for those provisions necessary
Opinion the Court
consider what the Unit officers have agreed work under the
wages, hours, and conditions specified the MOU exchange for the
compensation package (which includes the release time provisions). This
reflects the general contractual principle that one partys performance
(here, the Citys agreement pay release time) may supported
consideration the form performance return promise either
the promisee (arguably PLEA) another person (the Unit officers). See
Restatement (Second) Contracts 71(4), cmt. (Amer. Law Inst. 1981);
Turken, 223 Ariz. 350 33, 224 P.3d 166 (relying contract law
conclude that anticipated indirect benefits, when not bargained for part the contracting partys performance, are not consideration for Gift Clause
The Citys payments for release time are supported
consideration both terms PLEAs obligations under the MOU and the
City Code the employees authorized representative and the agreement the Unit employees work under the terms and conditions the
MOU. There contention that the $660 million the City pays under the
MOU grossly disproportionate the services provided police
officers. Viewed the context the MOU overall, the $1.7 million for
release time payments not grossly disproportionate, Turken, 223 Ariz. 350 35, 224 P.3d 166, the value what PLEA and the Unit officers
have agreed provide return.
The dissent twice observes that there showing that
absent release time, the City would unable employ police
officers. Infra 47,52. But the same could said about various forms
benefits ranging from vacation time life insurance. The pertinent issue
for Gift Clause analysis not whether particular expenditure the only
way achieve public purpose, but instead whether comprehensive
examination the agreement reveals that the expenditure grossly
disproportionate the benefit the public receives. Turken, 223 Ariz. 350 35, 224 P.3d 166.
~35 applying the consideration prong the Gift Clause, just assessing public purpose, courts must give due deference the
decisions elected officials. The Gift Clause violated when [the]
consideration, compared the expenditure, inequitable and
umeasonable that amounts abuse discretion. Id. 349 30, 224
P.3d 165 (quoting Wistuber, 141 Ariz. 349, 687 P.2d 357). The
Opinion the Court
Taxpayers have the burden proving gross disproportionality
consideration, Wistuber, 141 Ariz. 350,687 P.2d 358, and they have not
met that burden here.
Our decision Wistuber not the contrary. The court
appeals cited Wistuber holding that the MOVs release time provisions
lacked consideration. 238 Ariz. 20, 356 P.3d 820. that case, this
Court upheld provision school districts collective bargaining
agreement providing release time for teacher who was the president
the teachers association. The contract provisions specified how the teacher
would spend her release time. rejecting Gift Clause challenge, Wistuber
noted that the duties imposed upon [the associations president] are
substantial, and the relatively modest sums required paid the
District [were] not disproportionate invoke the constitutional
prohibition. 141 Ariz. 350,687 P.2d 358. Here, the court appeals
noted that,[u]nlike the detailed, mandatory contractual provisions upheld Wistuber, the MOV does not obligate PLEA provide any specific
duty exchange for release time. Cheatham, 238 Ariz. 20,22,356
P.3d 820.
Wistuber, however, did not hold that, general proposition,
release time provisions can only upheld they impose specific duties
the employees involved. Nor does Wistuber stand for the proposition that evaluating the adequacy consideration for benefits (such release
time) afforded under collective bargaining agreement, court should
consider only the performance the authorized representative, exclusive the represented employees.
Moreover, the court appeals and the trial court erred
matter law insofar they construed the MOV not limiting how
officers can use release time. Powell Washburn, 211 Ariz. 553, 555
125 P.3d 373, 375 (2006) (noting that contractual interpretation generally matter law). Collective bargaining agreements, like other contracts,
should construed avoid making their provisions illusory. Ariz.
Laborers, Teamsters Cement Masons Local 395 Health Welfare Trust Fund
Hatco, Inc., 142 Ariz. 364,367,690 P.2d 83, (App. 1984).
The MOV here, particularly when construed light the
City Code provisions, clearly contemplates that release time will used
for activities related PLEAs role the authorized representative for the
Opinion the Court
Unit officers, even does not specify minutely how release time will
used. (This includes the provision affording release time for legislative
representative, who work with and assist the [C]itys legislative
lobbyist. 2012-2014 MOU 1-3(C).)
~40 accordingly disagree with the dissent its characterizing
the use release time almost unchecked. Nor the dissent right
contend that release time involves diverting officers from safeguarding the
public. Infra 46. The MOU acknowledges that the costs the City
associated with release time were lieu wages and benefits; had the
release time provisions been omitted, the officers might have received other
benefits under the compensation package, such personal time paid
vacation time. Notably, after the trial court enjoined the use release time
under the 2012-2014 MOU, the City agreed that the remaining release time
would allocated police officers additional vacation time. Thus,
while true that particular officers will not engaged their usual
police duties while using release time, incorrect suggest that the
MOU, including release time, reduces total on-the-job time Unit
officers. (The MOU also requires officers obtain approval absent
themselves from duties use release time and such approval subject
Departmental operational and scheduling factors. 2012-2014 MOU 13(B)(3)(c).)
Nor our conclusion affected Taxpayers arguments that
release time under prior MOUs was used some instances for reasons
unrelated PLEAs representational role. Even those assertions are
correct (an issue not reach), the improper use release time would
not establish that the MOU violates the Gift Clause Gust the prospect breach does not mean contract contrary public policy lacks
consideration), but instead that the Unit officers the City might have
reason complain PLEAs violation the collective bargaining
agreement. See id. 1-5(F) (noting that penalties, pursuant the City Code,
may assessed against PLEA for breach obligations); see also Vaca
Sipes, 386 U.S. In, 195 (1967) (The appropriate remedy for breach
unions duty fair representation must vary with the circumstances the
particular breach.). Although one could reasonably argue that greater
specificity regarding the use release time would better serve the City and perhaps the Unit officers themselves such issues labormanagement relations should decided through the collective bargaining
process rather than dictated the courts under the guise the Gift Clause.
Opinion the Court
~42 also reject Taxpayers assertion that our decision Turken
establishes that the release time provisions violate the Gift Clause.
Turken, held that the Citys agreement pay developer much
$97.4 million for the use garage parking spaces mixed-use project
likely violated the Gift Clause. 223 Ariz. 350-51 ,-r,-r 40-43,224 P.3d 16667. Our opinion clarified that indirect benefits, when not bargained for
part the contracting partys promised performance, not satisfy the
consideration prong the Gift Clause analysis. Id. 350, ,-r 33, 224 P.3d 166. this respect, Turken inapposite because here the consideration
received the City not indirect benefits, but instead the obligations the
MOU itself imposes both PLEA and the Unit officers.
Finally, note the limits our holding. Our conclusion that
the release time provisions not violate the Gift Clause reflects our
consideration the MOU its entirety, viewed light the Citys Meet
and Confer Ordinance. From this perspective, cannot find that the City
Council abused its discretion determining that the MOU, including its
release time provisions, serves public purpose and that the Citys
payments are reasonable light the benefits receives. not
comment the desirability such provisions matter labor relations public policy. Nor address Taxpayers arguments, which were
not raised the trial court, that the release time provisions violate either
the right work provisions article the Arizona Constitution and
A.R.S. 23-1301 through 1307 the First Amendment rights non-PLEA
Because the challenged release time provisions not violate
the Gift Clause, reverse the trial courts judgment and entry
permanent injunction and vacate the opinion the court appeals.
TIMMER, J., joined BRUTINEL, J., dissenting.
~45 permitting the City subsidize PLEA simply because the
release time terms are tucked within collective bargaining agreement, the
majority undercuts the Gift Clauses aim prevent governmental bodies
from depleting the public treasury giving advantages special interests
... engaging non-public enterprises. Wistuber, 141 Ariz. 349,
687 P.2d 357. respectfully dissent.
The substantial benefits bestowed PLEA are allowable
under the Gift Clause only they serve public purpose. See Turken, 223
Ariz. 345 224 P.3d 161. public purpose served diverting
officers from safeguarding the public work almost unchecked for PLEA.
The City has control over how PLEA directs the officers release time
and not even told what the officers for PLEA. Kromko, 149 Ariz.
321, 718 P.2d 480 (stating that the fear private gain exploitation
public funds envisioned the drafters our constitution absent when
private entitys operation public hospital subject the control and
supervision public officials). testifying labor expert put it, [PLEA
officials] are given blank check ... they determine appropriate meet the needs their organization. Officers release time can lobby
the legislature for and against laws that interest PLEA and its members,
campaign for elected officials who support PLEA, attend PLEA functions,
manage PLEA elections, and engage any activities that promote PLEAs
private interests, even the Citys detriment. While these activities
may benefit officers and certainly benefit PLEA, they not serve public
purpose. Small Operative Plasterers Cement Masons Intl Assn Local
200, AFL-CIO, 611 F.3d 483, 486 (9th Cir. 2010) After all, the very purpose labor unions advocate zealously for their members.).
The majority finds that the release time provisions serve
public purpose because they are set forth the MOU, which tum serves
the public enabling the City hire and collectively negotiate with Unit officers. See supra 23, 25. view, the majority conflates the public
purpose served securing City employees through collective bargaining
with the public purpose served the terms reached through such efforts.
The City may derive some benefits from negotiating with Unit officers
through single representative rather than negotiating with individual
officers. But the public benefit resulting from collective bargaining does not
mean that the release time provisions agreed through that process
necessarily serve public purpose. that were so, public entities could
easily circumvent the Gift Clause simply placing gift within collective
bargaining agreement. And nothing suggests that PLEA would not have
negotiated MOU for Unit officers absent those provisions. Why else
would officers pay approximately $1.7 million annual dues PLEA
represent them determining wages, hours, and working conditions not
for PLEA negotiate their behalf?
The majoritys stronger argument that the release time
provisions promote public purpose serving component the
compensation package for Unit officers. See supra 24. The majority
emphasizes that the City originally allocated $660 million for Unit officer
compensation before negotiating with PLEA use chunk that
money for release time. See supra 14. City negotiator testified that this
chunk was cos ted against the compensation package whole, and was not used for release time, would folded back into the
compensation package. the City had included release time provisions its MOUs since 1977, however, hardly surprising that built release
time moneys into its Unit allocation. Nothing indicates that the City
would have allocated $660 million for Unit officers release time was off
the table. Indeed, before negotiations for the 2010-2012 MOU commenced,
the police department suggested City negotiators that [a] reduction
cost City funded PLEA operations would increas[e] funds available for
mission-critical functions; the department did not suggest that reduction
would free money increase officer benefits.
Other evidence supports the trial courts finding that the
MOU provisions were negotiated individually and not total package
offered Unit with those members being allowed divide how they
wished. See Shooter Farmer, 235 Ariz. 199, 200 330 P.3d 956, 957 (2014)
(We defer the trial courts findings fact unless they are clearly
erroneous.). City Councilman Sal DiCiccio testified that the MOU
provisions were separately negotiated rather than part total
package. The MOU does not require that unused release time paid
officers. And release time cannot accurately costed officers salaries
because large amount release time representation hours are
unlimited. Tellingly, after the court preliminarily enjoined the release time
provisions the 2010-2012 MOU, the City did not use the funds designated
for release time under that MOU compensate Unit officers. (After the
court found that release time not compensation, part because the City
did not treat such after the preliminary injunction, and entered the
permanent injunction, the City and PLEA amended the 2012-2014 MOU
provide additional vacation time officers equaling the number unused
release time hours. This belated act does not vitiate the evidence before the
court the time its ruling that the City did not treat release time
The majority cites language the MOU providing that
release time funded lieu wages and benefits. See supra ,-r 14.
Declaring this does not make so. look further than self-serving
contractual provision, private subsidies could escape Gift Clause scrutiny
whenever the parties agree that subsidies are compensation. Wistuber,
141 Ariz. 349,687 P.2d 357 (stating that determining the existence public purpose, the court should consider the reality the transaction
and not just the surface indicia public purpose).
Even the money designated for release time would have
otherwise been paid officers, does not necessarily follow that release
time serves public purpose compensation. Following the majoritys
logic, the City could compensate officers giving money private
business establish coffee house near police station for the officers
enjoyment. public purpose can stretched this far, the Gift Clause, least the public employment context, has met its end.
The majority characterizes position positing that
release time benefits violate the Gift Clause because they benefit private
organization. See supra ,-r 25. Not true. Payments private entity
provide benefits public employees undoubtedly can serve public
purpose providing incentive for public employment. Benefits such health insurance, gym memberships, and emergency child care for
employees fall within this category. Without attempting precisely define
what payments private entities constitute employee compensation for
Gift Clause purposes, minimum, such payments must substitute for the
moneys employee would otherwise pay for the benefit provided directly the employee the third party. Thus, payments PLEA represent officer grievance proceedings could compensation because the
officer would otherwise have pay money hire representative. But
when public resources given private entity can used for any purpose
directed the entity, here, and the public expenditure does not
substitute for expense the employee would otherwise pay, that
expenditure cannot considered compensation.
Alternatively, agree with the trial court and the court
appeals that the release time provisions violate the Gift Clause because the
City does not receive sufficient consideration return for its $1.7 million
outlay. Turken, 223 Ariz. 345 ,-r 224 P.3d 161 (stating that
comply with the Gift Clause, governmental entity must receive
consideration return for expenditure that not inequitable and
umeasonable that amounts abuse discretion) (citation and
internal quotation marks omitted). Whether the City receives sufficient
consideration turns the objective fair market value what PLEA
promised provide. See id. 350 ,-r 33, 224 P.3d 166. The record does
not reflect such value. Indeed, the City lacks mechanism quantify the
value benefits receives from the release time provisions.
~54 cannot see how any value the City receives from the release
time provisions approaches fair market value $1.7 million. The MOU
does not obligate PLEA provide any services the City. Any promotion employer-employee relations, see supra ,-r 25, fostered the release time
provisions are indirect benefits that cannot constitute consideration. id.
(rejecting assertion that indirect benefits constitute consideration). The
majority concludes that Unit officers agreement work police officers exchange for compensation package that includes release time
provisions sufficient consideration. See supra ,-r 32. Because agree with
the courts below that the extensive benefits given PLEA not serve
officer compensation, likewise reject the majoritys reasoning here.
Nothing the record suggests that the City could not employ police
officers without subsidizing PLEA with release time benefits. And any
release time that could compensation, for example, time used
represent officers grievance proceedings, has neither been quantified nor
assigned monetary value.
~55 subsidize labor organization under the guise
employee compensation violates the Gift Clause. That what has occurred
here. light the lack any contractual assurance that PLEA release
time actually serves public purpose, this generous benefit cannot
considered anything other than gift PLEA prohibited the Gift
Clause. would uphold the trial courts injunction.